Friday, July 22, 2022

The Food Price Crisis

 Putin and Russia's invasion of Ukraine is being blamed for the food crises that have arisen across much of the world. 

A March 2022 World Bank report refers to the food security crisis as a “food price crisis,” emphasizing that it’s not caused by shortage of food. The two major factors they have identified as driving the crisis are, “profiteering by major grain trading agribusinesses, which have already shown dramatic increases in profitability in January-March 2022 as they have raised their prices without being questioned, as everyone assumes that this is the result of war-driven supply shortages. The other is financial speculation in wheat futures markets, which can drive up prices even in spot markets.”

Global stocks of rice, wheat, and maize – the world’s three major staples – remain historically high. For wheat, the commodity most affected by the war, stocks remain well above levels during the 2007-2008 food price crisis. Estimates also suggest that about three-quarters of Russian and Ukrainian wheat exports had already been delivered before the war started.” 

The U.N. Food and Agriculture Organization’s (FAO) monthly ‘Cereal Supply and Demand Brief’ confirms this. The FAO’s forecast for global cereal production in 2022 has been raised by 7 million tonnes in July from the previous month and is now pegged at 2,792 million tonnes and is only 0.6 percent short of the output for the same period in 2021. According to the FAO, the shortfall caused by the Russia-Ukraine war has not impacted global wheat stocks much, thanks to higher-than-normal harvests.

An assessment by the International Panel of Experts on Sustainable Food Systems (IPES), too confirms that there is currently no risk of global food supply shortages. The IPES too identifies it as a “food price crisis,” but goes on to identify the causes. Stating that “the failure to reform food systems has allowed the war in Ukraine to spark a third global food price crisis in 15 years,” the report points to “fundamental flaws in global food systems – such as heavy reliance on food imports and excessive commodity speculation – for escalating food insecurity sparked by the Ukraine invasion,” adding that “these flaws were exposed, but not corrected, after previous food price spikes in 2007-8.”

An analysis of global wheat prices by economists C.P. Chandrasekhar and Jayati Ghosh reinforces this. Examining FAO data and projections from May 2021, much before the Russia-Ukraine war commenced, they find that the estimated global production of wheat in 2022 is likely to be lower than in 2021 by less than 1%, but around 2% higher than the average of 2018-20. Similarly, global trade in wheat is also projected to fall slightly when compared to 2021, but it will still remain higher than in 2018-20.

Navdanya, an organization founded by environmental activist Vandana Shiva, goes even further: it points to the evidence outlined above and says that the present crisis is the direct outcome of a broken global food system that exists primarily to serve agribusiness giants.”

The report, titled Sowing HungerReaping Profits – A Food Crisis by Design, traces the crisis to excessive financial speculation, increased commodity future pricing and increased volatility in the market, all of it adding up to bigger gains for corporate players, even as it drives up food prices globally. As Shiva puts it, “what the Russian-Ukrainian conflict has once again laid bare is just how fragile globalized food systems are, and how quickly a fluctuation in the market goes on to detrimentally affect the poorest. The current globalized, industrial agrifood system creates hunger by design.”

 Rolling Stone magazine report summed it up, “this crisis… is in some sense artificial, given that it is not driven by any actual shortage of food in the world,” adding, “Commodity traders make money off wild price swings, shippers make money off people desperate for grain, fertilizer manufacturers make money off farmers desperate to maximize their yields, and proto-fascist politicians are happy to exploit rising food prices as evidence of the failure of democracy.”

Taken from here

No Russian Roulette: The Hunger Emergency And The Global Corporate System | Countercurrents

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